Egypt: $400 million project will help improve and decarbonise the logistics and transport sectors

Washington, October 3, 2022 – The World Bank’s Board of Directors has approved a US$400 million development financing agreement to improve the performance of Egypt’s logistics and transport sectors and to support the transition to low-carbon transport along the Alexandria-on 6 October Rail Corridor-Greater Cairo (GCA) route.

Egypt’s rail system is one of the most extensive in Africa, with a generally greater emphasis on its passenger services, and three freight trains per direction per day in the GCA, with the rest dedicated to passenger trains.

The Trade Logistics Development Project from Cairo to Alexandria will implement a rail bypass to the congested GCA. The bypass will provide freight trains between the seaport of Alexandria and the new dry port of October 6, with an alternative route west of Greater Cairo. The operational bypass will also allow 15 container trains per day by 2030, and as demand increases, 50 trains by 2060 to this dry port. Additional freight trains will run between the port of Alexandria, Upper Egypt and the Red Sea.

The transport sector is the second largest contributor to Egypt’s greenhouse gas (GHG) emissions after an energy contribution of around 19%. Transporting containers and other goods by rail has a lower carbon footprint than by road. The Bank estimates that the project will reduce greenhouse gas emissions by 965,000 tonnes over 30 years.

The project also supports the advancement of government reform efforts to improve the performance of the rail sector and promote private sector participation by creating Egypt’s infrastructure access pricing regime. This pricing regime is similar to road tolls or airport charges. Private investors can operate their trains on the tracks of the Egyptian National Railway Authority for a fee, which boosts the authority’s finances.

“The Egyptian government is committed to SDG 13: Climate Action by designing and implementing mitigation projects that establish an advanced, sustainable and clean transportation network, while reducing carbon footprint. Sustainable transport projects, many of which are carried out in cooperation with Egypt’s development partners and private sector, are of great importance in terms of stimulating the country’s economic growth and empowering Egyptian citizens through the country, connecting major cities and business districts, and creating more job opportunities. The Trade Logistics Development Project from Cairo to Alexandria will support national efforts to transition to low-carbon transport and ensure the safe and timely delivery of people and goods; a key part of our growing economy,” said Dr. Rania A. Al-Mashat, Egypt’s Minister for International Cooperation.

The project will also encourage the participation of women in the labor market by supporting the professional development of female employees as well as the availability of childcare services.

The project will upgrade track and signaling on four segments – including a greenfield – between Alexandria, 6th of October City and GCA to achieve an operational rail bypass to GCA. This rail bypass will increase capacity especially for freight trains while decongesting the Greater Cairo area where demand for passenger trains is high.

“Reforming the transport and logistics sectors is vital for Egypt’s competitiveness and economic development,” said Lieutenant General Kamel El Wazir, Egypt’s Minister of Transport. “This new project introduces several improvements in these vital areas. The improvements are aligned with Egypt’s pressing development priorities, which include decarbonization, trade facilitation, private sector engagement and gender balance in the workplace. Increasing the number of containers transported by rail from zero to 184,000 per year is one of the main objectives of the project. This flow of containers is mainly between the seaport of Alexandria and the dry port of October 6, both private and rail.

The project will support Egypt’s integration into global value chains and its efforts to become a regional trade hub. This project will contribute significantly to Egypt’s 2050 plan on climate change, given the expected reductions in greenhouse gas emissions.

“This operation is part of a broader set of efforts to provide rapid and comprehensive support for Egypt’s economic development and climate change plans,” said Marina Wes, Country Director of the World Bank for Egypt, Yemen and Djibouti. “We hope that by further supporting job creation, including for women, a cleaner environment and safer mobility, the operation will contribute to a better and more prosperous future for all Egyptians.

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